SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to
Commission file number 0-23957
MEDITECNIC, INC.
(Exact name of small business issuer in its charter)
Nevada 87-0430532
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
Identification No.)
14 Quai du Seujet, Geneva, Switzerland CH-1201
(Address of principal executive offi (Zip Code)
Registrant's telephone number, including area code: (949) 489-2400
-------------------
Securities registered pursuant to Section 12(b) of the Act: None
----------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]
State issuer's revenues for its most recent fiscal year: None
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of December 31, 1999 was not determinable since the Common
Stock was not traded.
The number of shares outstanding of the issuer's classes of Common
Stock as of December 31, 1999:
Common Stock, $.001 Par Value - 7,527,485 Shares
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
PART I
Item 1. DESCRIPTION OF BUSINESS
Background
Meditecnic, Inc., a Nevada corporation (the "Company"), is the successor by
merger on April 18, 1998 with Viking Broadcasting Corporation, a Utah
corporation incorporated on May 4, 1984 as Carrigan Gold Corporation. Viking was
formed originally to sell and deal in minerals and oil and gas properties. This
venture and an investment in broadcasting properties were unsuccessful.
The primary activity of the company is the development and commercialization of
a medical device initially proposed to be sold to the dental market place (the
"Device"). The Device induces a cavitation in a liquid chemical substance. When
employed in the dental pulp cavity (such as in the case of performing a root
canal) the Device serves to clear, sterilize and seal the cavity and prepare it
for filling. The Device also has applications under investigation in the
endoscopic and opthalmic fields.
The Company has agreed to acquire the Device's license rights acquired from
Meditecnic, S.A.
("Meditecnic"). The executive offices of the Company are located at 14 Quai
du Seujet, Geneva, Switzerland CH
1201. Its U.S. telephone number is (949) 489-2400.
The Device
The Device as currently designed consists of a desktop machine, including (a) a
pump and a sealed fluid tank to induce cavitation in a fluid at specific
frequencies (b) meters and control valves, (c) a delivery system consisting of a
treatment nozzle with a hollow needle to bring the fluid to the treatment area,
and (d) a drying nozzle. A working prototype and a bill of materials have
already been developed. All parts for the Device are currently available off the
shelf from multiple suppliers. The Device is powered by alternating electric
current. The cavitation process consists in reducing pressure of a liquid in a
water tank and then modulating the pressure at predetermined resonant
frequencies, between atmospheric pressure and vapor tension (one tenth to one
fifth atmospheres). Cavitation causes an implosion in the resultant steam
bubbles, which sterilizes and removes loose or decayed materials. Saline
solution or special treatment fluids can be employed. Meditecnic has also
conducted preliminary testing of the Device for use in opthomology and
endoscopy. Based on the results of such tests, the Company believes that
commercial applications exist in these fields, but no development plans have
been formalized.
Joint Development Agreement
On August 1, 1994, Meditec S.A., the developer of the Device and then owner of
the patents, entered into a Joint Development Agreement with Kerr Corporation
("Kerr"). Kerr is a subsidiary of Sybron Corporation. Kerr develops,
manufactures, and markets a broad range of consumable dental products, including
restorative materials (which include amalgam alloys, composites, cavity liners
and ancillary products), curing lights, impression materials, endodontic
instruments and materials, dental burs, preventive products, laboratory
products, industrial jewelry products, and infection control products. Kerr's
sales are made primarily through dental distributors serviced by approximately
92 sales representatives worldwide.
On October 23 and November 19, 1996, Meditec SA sold all its patent rights to
Meditecnic S.r.l.
Kerr, Meditec S.A. and Meditecnic S.r.l. amended the Joint Development
agreement in February 1997 to assign all of Meditec's rights to Meditecnic
S.r.l., to assign Kerr's rights to Sybron Dental Specialists, Inc., an affiliate
of Kerr ("Sybron") and to give to Kerr the rights to obtain an exclusive license
to manufacture and sell the products licensed under a license agreement. On
February 19, 1997, Meditecnic S.r.l. and Sybron entered into a License
Agreement, pursuant to which Sybron was granted the worldwide exclusive right to
manufacture and sell Licensed Products under the License Agreement. On January
14, 1998, Meditecnic S.r.l. sold all of the patents and assigned the Sybron
agreement to Meditecnic.
The Company intends to acquire all of the patent rights of Meditecnic and
Meditec and all of the rights
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of the Sybron agreement for 925,000 swiss francs (approximately US$637,000). To
date no sales of Licensed Products have occurred. Sybron has informed the
Company that sales are expected to commence in June 1998 and based on this
information the Company believes that royalties would commence to be received by
the Company by December 1998, although there can be no assurance as to when any
royalties would be received.
Dentistry
There are approximately 152,000 dentists in active practice in the United
States, and an additional 400,000 dentists in Europe and the developed countries
of the world. According to U.S. government studies, as a result of fluoridation
of water and toothpaste and improved dental care, the incidence of dental
cavities decreased by 50% from 1960 to 1980. However, industry analysts believe
that, as the U.S. population grows and ages and more natural teeth are retained,
the demand for dental services will increase.
The practice of dentistry includes preventative restoration dentistry, as well
as subspecialties including endodontics (root canal procedures), periodontics
(treatment of gum disease), prosthodontics (replacement of teeth), oral surgery
and orthodontics. The Device has applications for periodontics and endodontics
in removing plaque and diseased tissue and to clean and sterilize tissue for
further treatment.
Plaque is a sticky, colorless film of bacteria that forms on teeth. If not
removed regularly, it can cause cavities or gum (periodontal) disease. Most
adults have periodontal disease, which can exist without symptoms for years.
When plaque is allowed to build up in the crevice between tooth and gum, it
eventually separates the gum from the tooth root. As the gum pulls away, the
bone underneath deteriorates. The resulting periodontitis causes tooth loss in
70% of all adults, according to the American Academy of Periodontology.
When plaque hardens, it becomes tartar, a rough, porous material that can be
removed only by professional cleaning. Although tartar itself is not believed to
cause periodontal disease, the presence of tartar makes plaque harder to remove.
Root canals are often necessary when decay has penetrated to the pulp of the
tooth (the tissue in the center of the tooth containing nerves and blood
vessels) and causes infection. The inflammation, in turn, causes swelling, which
strangles the pulp by cutting off the blood supply, thus killing the tissue.
Since a dead nerve usually becomes abscessed, spreading infection to nerves in
outer coverings or roots, the removal of the nerve (a root canal) is the only
way to prevent serious side effects (swelling, pain, etc.) and save the tooth.
Conventional treatment of root canals typically requires three appointments
with the dentist, during which the dentist, working through an opening in the
tooth's crown, sterilizes and packs the pulp chamber and root canals with molded
fillings. If a tooth is badly infected, the tooth may be left open for a day to
drain. Time between appointments can range from a day to two to three weeks,
depending on scheduling and the severity of problems. Root canals typically cost
$200 to $850 per tooth (depending on the number of canals in the tooth) for the
procedure itself, plus x-rays and other costs, according to recent dental
surveys, but are less expensive than tooth removal and replacement. Clinical
studies suggest that 25% of conventional root canals become re-infected within 6
to 24 months of the root-canal procedure, resulting in having to reopen or
remove the tooth.
Competition
The medical and dental marketplace is currently extremely competitive. The
Device will compete with similar cavitation-based designs, traditional dental
methods, dental lasers and kinetic devices. A number of the Company's
competitors have substantially greater financial resources and engineering,
development, manufacturing and marketing capabilities.
Government Regulation
The Company's products will be subject to significant government regulation in
the United States and other countries. To clinically test, manufacture and
market products for human diagnostic and therapeutic use, the
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<PAGE>
Company must comply with mandatory regulations and safety standards established
by the FDA and comparable state and foreign regulatory agencies. Typically,
products must meet regulatory standards as safe and effective for their intended
use prior to being marketed for human applications. The clearance process is
expensive and time consuming, and no assurance can be given that any agency will
grant clearance for the sale of the Company's products for routine clinical
applications, or that the length of time the process will require will not be
extensive.
There are two principal methods by which FDA regulated devices may be marketed
in the United States. One method is under Section 510(k) of the Food, Drug and
Cosmetics Act where applicants must demonstrate that the device for which
clearance is sought is substantially equivalent to a device marketed in
interstate commerce prior to May 28, 1976. The FDA's stated intention is to
review 510(k)s as quickly as possible, generally within 90 days; however, the
complexity of a submission or a requirement for additional information will
typically extend the review period beyond 90 days. Domestic marketing of the
product must be deferred until written clearance is received from the FDA. In
some instances, an Investigational Device Exemption ("IDE") is required for
clinical trials for a 510(k) notification.
Pursuant to its Joint Development Agreement with Kerr Corporation, Meditec S.A.
and Meditecnic s.r.l has agreed that Kerr will submit a 510(k) application with
the FDA within eight weeks of completion of a primate and human teeth study
presently being conducted. The Company understands that a 510(k) applications is
being prepared by Sybron.
The alternative method by which the FDA will allow regulated devices into
commercial distribution in the United States is under a Pre-Market Approval
("PMA"). A PMA application is required for a Class III medical device that does
not qualify for consideration under Section 510(k). The review period for a PMA
application is fixed at 180 days, but the FDA typically takes much longer to
complete its review.
The FDA typically requires clinical testing to determine safety and efficacy of
the Company's laser systems for hard tissue applications. To conduct human
clinical testing, typically the FDA must approve an Investigational Device
Exemption ("IDE").
The FDA also imposes various requirements on manufacturers and sellers of
products it regulates under its jurisdiction, such as labeling, manufacturing
practices, record keeping and reporting. The FDA also may require post-marketing
practices, record keeping and reporting requirements. There can be no assurance
that the appropriate approvals from the FDA will be granted, that the process to
obtain such approvals will not be expensive or lengthy, or that the Company will
have sufficient funds to pursue such approvals. The failure to receive requisite
approvals for the Company's products or processes, when and if developed, or
significant delays in obtaining such approvals, would prevent the Company from
commercializing its products as anticipated and could have a materially adverse
effect on the business of the Company.
Foreign sales of the Device will be are subject to the regulatory requirements
of the recipient country or, if applicable, the harmonized standards of the
European Community. These vary widely among the countries and may include
technical approvals, such as electrical safety, as well as the demonstration of
clinical efficacy. The Medical Device Directive is the latest standard of
medical device safety and performance which has been adopted by the fourteen
member states of the European Community and requires that all medical device
products be compliant by June, 1998 to continue marketing within the member
states.
The FDA and other governmental agencies, both in the United States and in
foreign countries, may adopt additional rules and regulations that may affect
the Company's ability to develop and market its products. There can be no
assurances that the Company's existing products will meet any future legislative
acts or requirements.
Item 2. DESCRIPTION OF PROPERTY
The Company has obtained in March 1998 the use of a limited amount of office
space at 14 Quai du Seujet, Geneva, Switzerland, at nominal cost. The Company is
seeking to locate additional office and research space
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in the near future. The Company pays its own charges for long distance telephone
calls and other miscellaneous secretarial, photocopying and similar expenses.
Item 3. LEGAL PROCEEDINGS
Not Applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 1999.
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<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) Market Information
The Company's Common Stock has been listed on the NASD OTC Electronic
Bulletin Board sponsored
by the National Association of Securities Dealers, Inc. under the symbol
"VKBR" since November 27, 1997 and then as MEDT.. There
has been limited trading of the Common Stock.
(b) Holders
As of December 31, 1999, there were approximately 120 holders of Company
common stock and two holders of Series A preferred stock.
(c) Dividends
The Company has not paid any dividends on its common stock. The
Company currently intends to retain any earnings for use in its business, and
therefore does not anticipate paying cash dividends in the foreseeable future.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Company has had limited operations to date other than the
acquisition of the patents and license rights. In March 1998 the Company raised
$100,000 in an offering of common stock. In 1999 the Company sold $3,000,000 in
Common Stock. The Company is in the research and development stage of its
products. Research and development costs were $206,508 in fiscal 1999 and
$27,062 in fiscal 1998. Research and development is carried out by a non
affiliated entity, Meditecnic SA, on a contract basis. The Company has an option
to purchase all of the capital stock of Meditecnic SA for CHF 400,000 granted
November 5, 1999, of which CHF 300,000 ($195,720) was paid in November 1999 and
is accounted for as a deposit. The Company also loaned $134,093 to Meditecnic
with interest at 5%. In addition the Company placed a CHF 60,000 deposit for the
purchase of patents in December 1999 ($38,346).
Cash on hand is believed to be sufficient to fund the Company's
operations until at least the end of fiscal 2000.
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company required to be
included in Item 7 are set forth in the Financial Statements Index.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
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<PAGE>
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Directors and Executive Officers
The members of the Board of Directors of the Company serve until the
next annual meeting of stockholders, or until their successors have been
elected. The officers serve at the pleasure of the Board of Directors.
Information as to the directors and executive officers of the Company is as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Position
Pierre Chamay 64 President and Director
Finn Robert-Tissot 59 Secretary/Treasurer and Director
</TABLE>
Mr. Chamay has been an independent business consultant since 1995.
From 1987 to 1995 he owned and
was an officer of several businesses in Lausanne, including Monchoisi, S.A.,
Centre Technique S.A., Monsa, S.A.
and La Sallaz. Since 1952 he has held executive positions or founded several
businesses. He graduated from the
College Calvin in Geneva and the University of Geneva with a degree
in economics.
Dr. Robert-Tissot has been a dental practitioner specializing in
implantology in Neuchatel, Switzerland since 1965. In addition to his degree in
dentistry, he received a doctorate in medicine from Oxford University in 1982.
Mr. Robert-Tissot has participated extensively in professional associations.
Item 10. EXECUTIVE COMPENSATION
No compensation is paid or anticipated to be paid by the Company until
the receipt of revenues. Directors currently receive no compensation for their
duties as directors.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information relating to the beneficial
ownership of Company common stock by those persons beneficially holding more
than 5% of the Company capital stock, by the Company's directors and executive
officers, and by all of the Company's directors and executive officers as a
group. The address of each officer and director is care of the Company.
<TABLE>
<CAPTION>
Percentage
Name of Number of of Outstanding
Stockholder Shares Owned(1) Common Stock
<S> <C> <C>
Pierre Chamay -- --
Finn Robert-Tissot -- --
Marina Zuliani 600,000 8.0%
Calle Martinengo 5974/B
30122 Venezia
Italia
Andrea Leardini 600,000 8.0%
Calle Martinengo 5974/B
30122 Venezia
Italia
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<PAGE>
Societe Financiere du Seujet Limited 600,000 8.0%
ICC House 17
Dame Street
Dublin 2
Ireland
(2) 1,600,000 21.2%
Operadora Financiera de Inversiones y Commercio S.A.
Via Espana y Calle Combia
Panama
Sangate Enterprises, Inc. 600,000 8.0%
Road Town-Pasea Estate
P.O. Box 3149
Tortola
British Virgin Islands
Laly Limited Group, Inc.(2) 1,600,000 21.2%
McW. Todman & Co.
Barristers & Solicitors
2nd Floor
116 Main Street P.O. Box 3342
Road Town, Tortola
British Virgin Islands
Orazio Pizzardi 600,000 8.0%
Via Milavio
10100 Settino Tormese, Italy
Maurice Tolub 600,000 8.0%
8, Dugit Street, Cluster 6
Cessarea, Israel
Colette Nouvel Rousselot 600,000 8.0%
7 Avenue de Verzy
F-75017, Paris
Herve Rousselot 600,000 8.0%
7 Avenue de Verzy
F-75017, Paris
All officers and
directors as a group
(2 persons) -- --
</TABLE>
(1) Unless otherwise noted below, the Company believes that all persons
named in the table have sole voting and investment power with respect to
all shares of Common Stock beneficially owned by them. For purposes
hereof, a person is deemed to be the beneficial owner of securities that
can be acquired by such person within 60 days from the date hereof upon
the exercise of warrants or options or the conversion of convertible
securities. Each beneficial owner's percentage ownership is determined
by assuming that any such warrants, options or convertible securities
that are held by such person (but not those held by any other person)
and which are exercisable within 60 days from the date hereof, have been
exercised.
(2) Does not include 500 shares of Series A Preferred Stock, which give this
holder together with the other holder of 500 shares, the right to elect
two-thirds of the Company's board of directors, but includes 1,000,000
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shares issuable upon exercise of an option at $2.00 per share held by
each of these persons.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In fiscal 1997, the Company issued 14,500 shares to two persons for
services rendered at a price of $1.00 per share. One of the persons who received
14,000 shares was then an officer and director. The shares were issued with a
restrictive legend. The Company believes this transaction is exempt under
Section 4(2) of the Securities Act of 1933 as a transaction not involving a
public offering.
On March 18, 1998, the Company issued 6,000,000 Shares of Common
Stock for $100,000 to ten persons, 1,000 shares of Series A preferred stock to
two purchasers in the common stock offering, and issued options to purchase
1,500,000 shares of common stock at a price of $2.00 per share to each of the
holders of the Series A Preferred Stock. The options were exercised in calendar
1999. The issuance of the common and preferred stock was made under Rule 504. A
Form D was filed with the Securities and Exchange Commission on March 18, 1998.
The options were issued under Regulation S to a non-U.S. purchaser.
The Company formed a wholly owned subsidiary, Meditecnic, Inc.,
under the laws of the state of Nevada in March 1998. The majority shareholders
of the Company have agreed by consent action to reincorporate the Company in
Nevada by merging the Company with and into Meditecnic Inc., such action to be
formally effectuated on April 18, 1998. In connection with the merger each ten
shares of the Utah Corporation will be exchanged for one new share of the Nevada
corporation. All information herein gives effect to a 1-for 100 reverse stock
split effected in March 1998 and to the merger as if it already had occurred.
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<PAGE>
PART IV
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits of the Company are included herein.
Exhibit No. Document Description
2. Charter and Bylaws
2.1. Articles of Incorporation(1)
2.2 Articles of Merger(1)
2.3 Bylaws(1)
3. Instruments Defining the rights of security holders
3.1 Option Agreement with Laly Limited(1)
3.2 Option Agreement with OFINCO(1)
5. Voting Trust Agreement
Not Applicable.
6. Material Contracts
6.1 Acquisition Agreement between the Comapny and
Meditecnic SA(1)
7. Material Foreign Patents
Not Applicable
(1) Incorporated by reference to such exhibit as filed with the Company's
registration statement on Form 10-SB,
File No. 0-23957.
(b) Reports on Form 8-K.
Not Applicable.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized August 31, 2000.
MEDITECNIC, INC.
By:/s/ Pierre Chamay
Pierre Chamay
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities on August 31, 2000.
By:/s/ Pierre Chamay President and Director
By:/s/ Finn Robert-Tissot Secretary, Chief Financial Officer and Director
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MEDITECNIC, INC.
(A Development Stage Company)
Financial Statements
December 31, 1999 and 1998
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Meditecnic, Inc.
We have audited the accompanying balance sheet of Meditecnic, Inc. (a Nevada
corporation) (a development stage company) as of December 31, 1999 and 1998 and
the related statements of operations, stockholders' equity, and cash flows for
the year ended December 31, 1999 and the period from March 24, 1998 (inception)
to December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Meditecnic, Inc. as of December
31, 1999 and 1998 and the results of its operations and its cash flows for the
year ended December 31, 1999 and the period from March 24, 1998 to December 31,
1998 in conformity with generally accepted accounting principles.
Crouch, Bierwolf & Associates
Salt Lake City, Utah
August 3, 2000
2
<PAGE>
<TABLE>
<CAPTION>
Meditecnic, Inc.
(A Development Stage Company)
Balance Sheet
ASSETS
December 31, December 31,
1999 1998
CURRENT ASSETS
<S> <C> <C>
Cash and Cash Equivalents (Note 3) $ 267,820 $ 860,288
Interest Receivable 9,597 3,056
Marketable Securities (Note 4) 1,657,600 1,585,467
Total Current Assets 1,935,017 2,448,811
OTHER ASSETS
Patents (Note 5) 637,260 637,260
Deposits (Note 12) 234,066 --
Note receivable - non current (Note 9) 134,093 --
TOTAL ASSETS $ 2,940,436 $ 3,086,071
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
Preferred Stock 10,000,000 shares
authorized; $.001 par value 1,000 shares of
Series A Preferred issued and
outstanding (Note 11) $ 1 $ 1
Common Stock, $.001 par value;
50,000,000 shares authorized;
7,527,485 shares issued and
outstanding (Note 11) 7,528 7,528
Additional paid-in capital 3,075,055 3,075,055
Deficit Accumulated During Development Stage (148,655) (7,623)
Accumulated Other Comprehensive Income 6,507 11,110
Total Stockholders' Equity 2,940,436 3,086,071
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,940,436 $ 3,086,071
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE>
<TABLE>
<CAPTION>
Meditecnic, Inc.
(A Development Stage Company)
Statements of Operations
Accumulated
For the Period Since March 24,
For the Year March 24, 1998 (inception)
Ended 1998 to through
December 31, December 31, December 31,
1999 1998 1999
<S> <C> <C> <C>
REVENUE $ -- $ -- $ --
EXPENSES
General and Administrative 28,445 49,109 77,554
Research and Development (Note 6) 206,508 27,062 233,570
Total Expenses 234,953 76,171 311,124
NET INCOME (LOSS) $ (234,953) $ (76,171) $ (311,124)
OTHER INCOME (LOSS)
Interest Income 27,030 3,056 30,086
Interest Expenses (5,242) (1,832) (7,074)
Gain on marketable Securities (Note 4) 72,133 67,352 139,485
Total Other Income 93,921 68,576 162,497
NET (LOSS) $ (141,032) $ (7,595) $ (148,627)
Taxes (Note 7) -- -- --
NET (LOSS) PER SHARE $ (.02) $ --
AVERAGE OUTSTANDING SHARES 7,527,588 5,610,921
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
<TABLE>
<CAPTION>
Meditecnic, Inc.
(A Development Stage Company)
Statements of Stockholders' Equity
From Beginning of Development Stage on
March 24, 1998 through December 31, 1999
Accumulated
Accumulated Deficit
Additional Other During the
Preferred Stock Common Stock Paid-in Comprehensive Development
Shares Amount Shares Amount Capital Income (Loss) Stage
Balance, March 24, 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(Note 1) -- $ -- 27,485 $ 28 $ -- $ -- $ (28)
Sale of shares in Rule 504
placement in March 1998
(Note 11) 1,000 1 6,000,000 6,000 95,734 -- --
Exercise of options in July
and September 1998 (Note 11) -- -- 1,500,000 1,500 2,979,321 -- --
Other Comprehensive income:
Foreign currency translation
adjustment -- -- -- -- -- 11,110 --
Net Loss -- -- -- -- -- -- (7,595)
Balance,
December 31, 1998 1,000 1 7,527,485 7,528 3,075,055 11,110 (7,623)
Other Comprehensive income:
Foreign currency translation
adjustment -- -- -- -- -- (4,603) --
Net Loss -- -- -- -- -- -- (141,032)
Balance,
December 31, 1999 1,000 $ 1 7,527,485 $ 7,528 $ 3,075,055 $ 6,507 $ (148,655)
</TABLE>
The accompanying notes are an integral part of these financial statements
5
<PAGE>
<TABLE>
<CAPTION>
Meditecnic, Inc.
(A Development Stage Company)
Statements of Cash Flows
Accumulated
For the Period Since Inception
For the Year March 24, March 24, 1998
Ended to to
December 31, December 31, December 31,
1999 1998 1999
CASH FLOWS FROM
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net Income (Loss) $ (141,032) $ (7,595) $ (148,627)
Increase in Interest Receivable (6,541) (3,056) (9,597)
Increase in Other Comprehensive
Income (Loss) (4,603) 11,110 (6,507)
Net cash flows from
operating activities (152,176) 459 (151,717)
CASH FLOWS FROM
INVESTING ACTIVITIES
Cash used for patent acquisition -- (637,260) (637,260)
Cash used for deposit (234,066) -- (234,066)
Increase in Marketable Securities (72,133) (1,585,467) (1,657,600)
Increase in Note Receivable (134,093) -- (134,093)
Net cash flows from investing activities (440,292) (2,222,727) (2,663,019)
CASH FLOWS FROM
FINANCING ACTIVITIES
Sale of common stock -- 3,082,556 3,082,556
Net cash flows from financing activities -- 3,082,556 3,082,556
INCREASE (DECREASE) IN CASH (592,468) 860,288 267,820
CASH AT THE BEGINNING OF PERIOD 860,288 -- --
CASH AT END OF PERIOD $ 267,820 $ 860,288 $ 267,820
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 5,242 $ 1,832 $ 7,074
Taxes $ -- $ -- $ --
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
Meditecnic, Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
NOTE 1 - GENERAL
Meditecnic, Inc. (the "Company") a Nevada corporation (incorporated on
March 24, 1998) is the successor by merger with Viking Broadcasting
Corporation, a Utah corporation incorporated on May 4, 1984 as Carrigan
Gold Corporation. Prior to the merger and the subsequent acquisition of
certain patent rights, Viking was inactive and had discontinued
operations. The Company's primary business is developing and marketing
advanced products for dental and endoscopic applications.
The Company has not generated any significant revenues from it's
operations and is defined as a development stage company per SFAS No.
7.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Foreign Currency Translation - Foreign currency transactions (all of
which have been in Swiss Francs) are translated into US dollars at the
applicable average daily interbank floating rates of exchange,
prevailing at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies are translated into US
dollars using the applicable exchange rates prevailing at the balance
sheet date. The Company's share capital and reporting currency is
denominated in US dollars.
Estimates - The preparation of financial statements in accordance with
generally accepted accounting principals requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reportable amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Loss Per Share - Basic and Diluted - The Company follows SFAS No. 128,
"Earnings Per Share". Based earnings per share is computed by dividing
income available to common stock holders by the weighted average number
of shares outstanding. In computing diluted earnings per share, the
weighted average number of shares outstanding is adjusted to reflect
the effect of potentially dilutive securities including options,
warrants, preferred stock or contingently issuable (or escrowed) stock,
and income available to common stockholders is adjusted to reflect any
changes in income or loss that would result from the issuance of the
dilutive common shares. There were no potential common shares included
in the calculation of diluted loss per share for the years ended
December 31, 1999 and 1998, because the effect would have decreased the
loss per share amount and therefore been anti-dilutive.
7
<PAGE>
Meditecnic, Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
Continued
NOTE 3 - CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with a
maturity of three months or less at the time of purchase to be cash
equivalents. Cash equivalents are carried at cost, which approximates
market. The company maintains cash in bank deposit accounts which, at
times, may exceed federally insured limits or are in foreign banks.
NOTE 4 - MARKETABLE SECURITIES
The Company's securities investments that are brought and held
principally for the purpose of selling them in the near term are
classified as trading securities. Trading securities are recorded at
fair value on the balance sheet in current assets, with the change in
fair value during the period included in earnings. Net increase in
marketable securities for 1998 and 1999 were $67,352 and $72,133,
respectively.
NOTE 5 - PATENTS
Acquisition costs of patents are capitalized. The Company acquired
certain patents by agreement dated March 24, 1998 for a purchase price
of CHF 950,000 ($637,260 at the exchange rate in effect on the contract
date). The Company paid all amounts on the contract by July 30, 1998.
These patents will be amortized commencing on commercialization of the
patents. Annual taxes and patent license fees and legal costs
associated therewith are expensed as incurred. The continuing carrying
value of patents is assessed based upon the Company's operating
experience, expected cash flows from related products and other factors
as deemed appropriate.
NOTE 6 - RESEARCH AND DEVELOPMENT
Company-sponsored research and development costs related to both
present and future products are expensed as incurred. For the years
ended December 31, 1999 and 1998 research and development costs were
$206,508 and $27,062, respectively.
8
<PAGE>
Meditecnic, Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
Continued
NOTE 7 - INCOME TAXES
The Company follows Statement of Financial Accounting Standards
("SFAS") No. 109, 'Accounting for Income Taxes", which requires the
recognition of deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred income
taxes are recognized for the tax consequence in future years of
differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year-end based on enacted tax laws
and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the
amount expected to be realized. The provision for income taxes
represent the tax payable for the period and the change during the
period in deferred tax assets and liabilities. As of December 31, 1999
and 1998 there were no deferred tax liabilities or assets. As of
December 31, 1999, the Company had net operating loss carryforwards for
federal purposes of approximately $140,000. The federal net operating
loss carryforwards begins expiring in 2018. The utilization of net
operating loss carryforwards may be limited under the provision of
Internal Revenue Code Section 382 and similar state provisions. The
Company has no U.S. operations and is incorporated in Nevada which
levies no income tax on corporations.
NOTE 8 - STOCK-BASED COMPENSATION
Stock Option Plans - The Company had stock options granted to three
companies to acquire shares of the Company's Common Stock at a price of
$2 per share (set by the board of directors). The options expire
December 31, 2004. A summary of activity follows:
<TABLE>
<CAPTION>
Options: 1999 1998
Weighted Weighted
Number Average Number Average
of Exercise of Exercise
Shares Price Shares Price
<S> <C> <C> <C>
Outstanding at beginning of year -- $ -- -- $ --
Granted -- -- 1,500,000 2.00
Exercised -- -- 1,500,000 2.00
Cancelled -- -- -- --
Outstanding at end of year -- $ -- -- $ --
Exercisable at end of year -- $ -- -- $ --
</TABLE>
9
<PAGE>
Meditecnic, Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
Continued
NOTE 8 - STOCK-BASED COMPENSATION (continued)
As permitted by SFAS #123 "Accounting for Stock-Based Compensation,"
the Company has elected to account for the stock option plans under APB
#25 "Accounting for Stock Issued to Employees." Accordingly, no
compensation cost has been recognized for these plans when options were
issued at equal to or more than fair market value.
NOTE 9 - NOTE RECEIVABLE
Note receivable is comprised of a note in the amount of $134,093 loaned
in April 1999 to Meditecnic, S.A. which performs research and
development for the Company. The note is due on December 31, 2002 and
bears interest at 5% per annum, payable semi-annually.
NOTE 10 - FOREIGN CURRENCY TRANSACTION GAIN (LOSS)
Foreign currency transaction gains and losses result from a change in
exchange rates between the functional currency of the Company and the
currency in which a foreign transaction is denominated. These gains or
losses are comprised of actual currency gains or losses realized upon
settlement of foreign currency transactions and expected (unrealized)
currency gains or losses on unsettled foreign currency transactions.
NOTE 11 - STOCKHOLDERS' EQUITY
In March 1998 the Company effected a placement under Rule 504 of
6,000,000 common shares and 1,000 shares of Series A Preferred Stock to
ten persons for $101,735 and options to purchase 1,500,000 shares at
$2.00 per share. The options were exercised in fiscal 1998 for net
proceeds of $2,980,821 (net of offering costs).
When the Company changed domicile to Nevada, the capital structure was
changed to authorize 50,000,000 common shares, $.001 par value, and
10,000,000 shares preferred shares, $.001 par value. 1,000 shares of
the preferred stock have been designed as Class A with the following
rights and privileges:
- no rights to dividends
- no redemption value
- liquidation limited to $.01 per share
- rights (as a whole) to vote 2/3 of the members of the
board of directors
10
<PAGE>
Meditecnic, Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
Continued
- no conversion rights
- restrictions on transferability
NOTE 12 - DEPOSITS
The Company paid CHF 300,000 ($234,066) in September 1999 as a deposit
on purchase of Meditecnic, SA, a non-affiliated research contractor. As
of the Audit date the purchase was not completed.
NOTE 13 - COMMITMENTS
The Company has signed a contract with an individual to pay CHF 40,000
for the purchase of the technical and intellectual properties related
to the Company's dental and endoscopic business. The contract also
calls for his assistance int eh further development of the technology
as much as possible over an unspecified period of time.
11
<PAGE>
